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Ottawa, 21 August 1992
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Decision CRTC 92-607
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CJAB-FM Inc.
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165561 Canada Inc.Radio Chicoutimi Inc.Chicoutimi and Jonquière, Quebec- 920098100 - 920097300 - 920352200
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Following a Public Hearing in Quebec City beginning on 19 May 1992, the Commission approves the following two applications:
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-An application by CJAB-FM Inc., licensee of CJAB-FM Chicoutimi, for authority to transfer 100% of its issued and outstanding common voting shares from Radio Saguenay Ltée. to Radiomutuel Inc. (Radiomutuel). Radiomutuel intends subsequently to amalgamate with CJAB-FM Inc.
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-An application by 165561 Canada Inc., a wholly-owned subsidiary of Radiomutuel, for authority to acquire the assets of CKRS Jonquière, currently owned by Radio Saguenay Ltée, and for a broadcasting licence to continue the operation of CKRS.
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For the reasons set out below, the Commission denies the application filed by Radio Chicoutimi Inc. on behalf of Télémédia Communications Inc. (Télémédia) to amend the broadcasting licence for CJMT Chicoutimi to authorize the transmission of CJMT's programming from the studios of CKRS Jonquière rather than from studios in Chicoutimi as currently authorized. In denying this application, the Commission rejects the management model proposed in the application providing for the amalgamation of the newsrooms of the two competing AM stations serving the Saguenay region, CKRS and CJMT.
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Transfer of ownership applications
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Radio Saguenay Ltée is the licensee of CKRS and CJAB-FM, as well as of television stations CKRS-TV Jonquière, a CBC affiliate, and CFRS-TV Jonquière, a Quatre-Saisons network affiliate. At the hearing the vendor described the many serious problems that have plagued its operations in recent years, notably the loss of several hundred thousand dollars by CKRS. The vendor stated that it had made several attempts to revive the station without success, and decided to discontinue operations at CKRS in the fall 1991 if it was unable to find a buyer for the station. The vendor added that it was satisfied that Radiomutuel, the only party to make an offer to purchase, has the financial resources, human resources and expertise to revive both CKRS and CJAB-FM.
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Radiomutuel is one of the largest broadcasting groups in Quebec; it also serves most regions of the province through its AM and FM radio networks and eleven radio stations. In addition, Radiomutuel shares, with CHUM Limited, ownership of Musique Plus Inc. which operates the MusiquePlus music video service, available on cable.
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The purchase prices relating to these transactions are $1,601,000 for CJAB-FM and $660,360 for CKRS. Based on the evidence filed with the applications, the Commission has no concerns with respect to the availability or the adequacy of the required financing. Because the Commission does not solicit competing applications for authority to transfer effective control of broadcasting undertakings, the onus is on the applicant to demonstrate to the Commission that the applications filed are the best possible proposals under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature. As a first test, the applicant must demonstrate that the proposed transfers will yield significant and unequivocal benefits to the communities served by the broadcasting undertakings and to the Canadian broadcasting system as a whole, and that they are in the public interest.
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In particular, the Commission must be satisfied that the benefits, both those that can be quantified in monetary terms and others that may not easily be measured in terms of dollar value, are commensurate with the size of the transactions and take into account the responsibilities to be assumed, the characteristics and viability of the broadcasting undertakings in question, and the scale of the programming, management, financial and technical resources available to the purchaser.
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The Commission has assessed the benefits package identified by the applicant as flowing from these transactions and, in general, is satisfied that it is significant and unequivocal, and that approval of the transactions is in the public interest.
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According to Radiomutuel, the intangible benefits to result from these applications include the on-air promotion of Canadian talent on CJAB-FM, representing an estimated indirect expenditure of approximately $40,000 per year. With regard to CKRS, the principal benefit associated with the transaction is the purchaser's commitment to ensure that the station survives and continues to provide a local programming service. Among the proposed tangible benefits, the Commission notes, in particular, the annual direct expenditures of $28,500 in the first year, increasing to $40,000 in the seventh year, for a music competition, "Les nouveaux conquérants" for young artists in the Saguenay region to be organized by CJAB-FM. CJAB-FM will also make an annual contribution of $10,000 to Musicaction. The Commission notes that all of the proposed benefits will apply to each of the next seven years of operation.
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Following the approval of the transfer of assets of CKRS, and on surrender of the existing licence, the Commission will issue to 165561 Canada Inc. a licence expiring on 31 August 1994, the expiry date of the existing licence. The new licence will be subject to the same conditions as those specified in the current licence, as well as to any other condition specified in the licence to be issued.
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Application to amend the licence for CJMT Chicoutimi
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As stated in the notice of public hearing, the application filed by Radio Chicoutimi Inc. on behalf of Télémédia was contingent upon the Commission's approval of the transfer of CKRS assets and of the joint management model proposed for CKRS and CJMT.
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At the hearing, representatives of Radiomutuel and Télémédia described to the Commission the concept they had developed for operating the two Saguenay AM stations on a joint basis. They expressed the view that the economic situation and the structure of the regional market do not favour the operation of two AM stations in the conventional mode. To ensure that both radio services survive, they devised a plan to operate the two stations on a joint basis by integrating their technical services, sales operations, studios and newsrooms. It was also proposed that operations would be overseen by a management company, Diffusion SAMI Inc., which would be owned equally by Radiomutuel and Télémédia.
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Thirteen individuals and groups from the region presented their views at the public hearing, including several elected officials, labour unions and local organizations. Although the interveners generally did not oppose the ownership transfer applications, most were opposed to, or expressed grave concerns about, the joint operation of the two AM stations. Essentially, the interveners were concerned about the formation of a news monopoly, and the standardization of local content in CKRS and CJMT programming.
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The Commission generally shares the concerns expressed by the interveners regarding news programming. In the interest of efficiency and economy, the Commission has authorized some AM stations to be operated on a joint basis with an FM station operating in the same market under the same owner. It has also authorized licensees of these jointly operated stations to use the same newsroom provided that each station treats the news in a different manner. In the Saguenay region, CKRS and CJAB-FM are an example of this type of joint arrangement, as are CJMT and CFIX-FM. The Commission notes that under the present proposal, in addition to local programming on the two AM stations originating from the same production centre, the four stations involved would also receive their news copy from the same newsroom.
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The Commission is aware of the difficult economic situation in which the Saguenay radio stations are operating. Such circumstances are not unique to that market. On balance, however, it considers that, in attempting to solve this difficult problem, there must be no adverse impact on the quality of news coverage and the diversity of news sources, particularly in a region as vast as the Saguenay. The Commission is not prepared to authorize these four radio stations serving the same market, all of them affiliated with Quebec's two largest AM and FM networks, Télémédia and Radiomutuel, to rely on only one newsroom. Further, the Commission considers that the proposal to provide each of the two AM stations with its own news editor as a means to offset the disadvantages of the joint arrangement does not alleviate to a sufficient degree the Commission's concerns regarding information standardization and the independence of news sources.
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In view of all of the foregoing, the Commission has chosen to maintain a competitive environment in the Saguenay radio market. The Commission encourages the parties involved to collaborate where possible, but to ensure optimum diversity among information services in this region.
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Allan J. Darling
Secretary General
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